The Japan Electric Power Exchange (JEPX) said on Tuesday it would launch trading
of green power and U.N. carbon offsets from Nov. 17 on a trial basis.

The electric power industry accounts for about a third of Japan's total
greenhouse gas emissions, and the new trading scheme will provide another venue
for those utilities struggling to meet the industry's voluntary emissions
reduction goals under the Kyoto Protocol.

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Green power includes power originating from nuclear, hydro and solar power
plants.

The exchange will begin offering trading of carbon-neutral power generated
from fossil fuels but offset by U.N. carbon credits from April, Japan's trade
ministry said separately.

The Japanese government and big corporations have been active in buying U.N.
carbon offsets to help the world's fifth-biggest polluter meet its greenhouse
gas emissions reduction target under the United Nations' Kyoto Protocol.

The JEPX, for spot and forward electricity transactions, has 40 member
companies. They range from utility, oil and manufacturing companies to
independent power producers.

The state-backed Japan Bank for International Cooperation launched a similar
system for trading Certified Emission Reductions (CERs) in November 2007.

The Tokyo Stock Exchange, Japan's biggest bourse, is set to end a feasibility
study on CERs by the end of this year and is awaiting a clear policy on
emissions caps and trading from the Japanese government.

Japanese electric power companies are major buyers of U.N. carbon offsets.
They either buy offsets from other holders or receive them in exchange for
investing in U.N.-approved clean energy projects in developing countries.

The electric power sector as a whole held 190 million tonnes of such offsets
for delivery between 2008 and 2012, the Federation of Electric Power Companies
of Japan has said. (Reporting by Osamu Tsukimori; Editing by Chris Gallagher)